The Unique Challenges with Pharmaceutical Patents
Patent protection for pharmaceutical companies is different from IP protection in other industries. Many technology-based inventions can be kept secret until they reach market, when products can utilize the full term of patent protection — twenty years. The high cost involved in research and development (R&D) means the majority of pharmaceutical companies apply for patent protection during research stages and before clinical trials. The average effective patent life for medicines is just 11.5 years.
Pharmaceutical companies should consider obtaining patents for the broadest possible scope during the R&D process. ‘Methods of Use’ and ‘Formulation’ patents can be filed later — at the clinical trial stage of drug development and when the products, use is properly defined.
The issue of reduced patent life has been addressed in legislation in the United States, where patent applicants can now apply for a term extension. However, the time periods permitted for such extensions do not always equal the time lost. In the United States, patents can only be extended for half the time period that was consumed by the regulatory approval process and for a maximum effective patent term of fourteen years.
Trade secrets are becoming an increasingly useful tool for pharma, particularly in the US where recent changes to guidelines for examination at the US Patent and Trademark Office have applied severe limitations on the patentability of natural products and methods using laws of nature. While patent protection in many territories is limited to twenty years from the date of filing, the period of protection conferred by a trade secret can be indefinite. Trade secrets entail significant risk but can speed up the process of drug development.
The Great Patent Divide
Drug development requires significant funding, but with a strong patent system and a market free of price controls, the American pharmaceutical industry is rarely short of investment. The private sector, which focuses heavily on R&D, is largely protected by patents. But the public sector is far more open.
Until the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement in 1994, many developing countries provided little opportunity for patent protection for pharmaceutical products. While the countries that joined the World Trade Organisation (WTO) committed to providing stronger patent protection, less developed countries were not required to meet this obligation until 2016.
Successful research and development in pharmaceuticals is occurring in developing countries such as Brazil, China, Cuba, Egypt, India, Kenya, South Africa, and South Korea. These nations are at varying points of economic development, but each is considered an “innovating developing country” in pharmaceuticals.
If a pharmaceutical company cannot secure private investment, it may be forced to develop a new product in the public arena, making it harder to protect its ideas. Alternatively, it would need to resort to protection via trade secrets. The combination of poor patent protection and a lack of experience licensing IP to the private sector, means the development of commercial enterprises is much more difficult.
Generic ‘copycat’ companies also have access to a company’s drug development process when it is forced to take place in public. With little chance of patents being an obstruction, companies can quickly reproduce drugs cheaply and in large volumes.
To Patent or Not to Patent?
Generic companies such as Ranbaxy Laboratories are increasingly taking advantage of the tedious pharma patent lifecycle. Ranbaxy reportedly reaped $500 million in sales from its knockoff of Pfizer’s cholesterol pill Lipitor during its first six months on the market. The competitive nature of the market makes patents a critical form of IP management and protection. It is important that pharma companies seek an intelligent intellectual property management solution to provide competitor insight, manage the lengthy protection process and fuel insightful research and development. Patents can significantly reduce the risk of revenue loss and safeguard the pharmaceutical industry’s development and innovation for the future.